Need explanation how to get 140000 and why Mars Services In

Need explanation, how to get 140000, and why ...

Mars Services. Inc pays S790.000 to acquire 32% (200,000 shares) of voting stock of Grey Investments, Inc. on January 5, 2017 Grey Investments Inc. declares and pays a cash dividend of $1.40 per share on June 14, 2017. Which of the following is the correct journal entry for the transaction on June 14, 2017? 140,000 O A. Cash 140,000 Long-term Investments-Mars Services, Inc. 140,000 B. Cash Long-term Investments Grey Investments, Inc 140,000 O C. Cash 140,000 40,000140.000 D. Long-term Investments-Grey Investments, Inc Cash

Solution

Computation of dividend value:-

Total no of shares getting dividend = 2,00,000 shares

Cash dividend per share . = 1.4 per share

Declare dividend date. = June 14 , 2017

Shares acquisition date. = January 5, 2017

From the above date, we should understand that dividend can recieve only for the period from January to June .

i.e., total dividend revived= 2,00,000*1.4*1/2 = 1,40,000